Smartphone app payments company Square has had a pretty big week. It was revealed the company is further dipping its toes in the cryptosphere through a granted payments patent, and it’s causing quite a stir. Wall Street analysts have deemed the company a golden goose, thereby helping its stock price jump by 6%, and it’s finally getting an Apple-ready Lightning plug to ease users’ and merchants’ worries about design changes.
Square Granted Patent for Crypto Payment Network
Merchants using the Square digital payments platform will soon be allowed to accept virtually any cryptocurrency, if the patent granted to the publicly traded company is to be believed. Ecosystem news outlet CCN appears first to have uploaded the 30-page approval document from the US Patent & Trademark Office. The company’s application was submitted Fall of last year, and the approval is dated from a few days ago.
Converting from fiat currencies into crypto is something that has been done for years within the ecosystem by platforms such as Bitpay. The difference with Square is that it hits the crypto world already well established among millions of merchants. One of the most difficult aspects of spreading adoption among businesses is convincing them to also come along on other aspects of the infrastructure, from wallets to specialized point of sale systems. Square skips all of that, and thus its power.
One immediate worry for any mainstream payments company dabbling in crypto is a possible slowdown in confirmations, as in the case of bitcoin core (BTC) during late 2017, impacting transaction times. According to the patent, Square has its own private blockchain, which could theoretically allow the company to monitor balances before final wiring/broadcasting. Double-spending is still possible, though difficult, but Square has smartly taken that burden off merchants and placed it on its own shoulders.
“The disclosed technology addresses the need in the art for a payment service capable of accepting a greater diversity of currencies,” the patent reads, “including virtual currencies including cryptocurrencies (bitcoin, ether, etc.)…than a traditional payment system in a transaction between a customer and a merchant, and specifically for a payment service to solve or ameliorate problems germane to transactions with such currencies. Specifically, the payment service described herein can facilitate real-time (or substantially real-time) transactions, allowing a customer to pay in any currency of their choice, while the merchant can receive payment in a currency of their choice.”
Square Lauded, Jumps 6%
The most highly touted crypto patent by a publicly traded company has been Bank of America (BA) adding to its collection. To anyone’s knowledge, BA has yet to act on any of them. Some have suggested they were only used as ways to market the legacy bank more than anything else. Square might be different here, again, though it doesn’t have to be. Its CEO has more or less predicted bitcoin core (BTC) will be a world standard currency within the decade.
Whatever the actual case, it has been a good week, news-wise, for Square. On top of making the ecosystem buzz with a crypto payments patent, its shares rose by 6% after Guggenheim showered it with praise as a “best idea” within the financial technology space. It went further, suggesting Square is its “highest conviction name” in the sector, and raised its price call from $75 to $100.
In 2018 alone, the company’s stock price has boomed by more than 130%, and Guggenheim’s Jeff Cantwell noted, “We expect a strong rate of revenue growth for SQ which should drive further share price appreciation.” Much of that optimism is based around the company’s application, Cash App.
It eerily apes what original cryptos like BTC were meant to do: borderless money transfers, be a staple of micro finance, and even act as way to get at the unbanked. Mr. Cantwell continued, “We think Cash App’s future revenue potential is underappreciated, we see it providing a key ‘services’ role for the underbanked.” In this year’s second quarter, Cash App users spent a quarter of a billion dollars with its linked debit card, Cash Card.
If patents and stock prices booming were not enough, the iconic smartphone reader and payments platform has also finally received a Lightning plug to make up for Apple’s ditching of a listenable headphone jack.
For Apple it was a matter of phone aesthetics and space. For Square users and merchants, it was a matter of financial life and death. Without the square reading block, usually white, the entire project goes out the window.
Ultimately its users found workarounds and adapted. It was a stroke of genius to initially re-purpose the headphones’ auxiliary, but it also left them, at least momentarily, exposed should a design change happen. Square would give in and sell a clunky adapter, but that obviously lessened some of the get-it-and-go cache the product was built upon.
Returning to their initial business model, Square announced recently it will now offer an answer to Apple’s Lightning opening – that slim, rectangular entrance every Apple user is familiar when charging their phone. The plug will make the device compatible from 2012 products to the present day. The company can stay small, agile, and refrain from forcing its users into adapters.
Is Square becoming an important part of crypto? Let us know in the comments below.
Images via Pixabay.
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